Display:
Chairman Ben S. Bernanke
Semiannual Monetary Policy Report to the Congress
Before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, Washington, D.C.
July 21, 2010: two highlights

  • "One approach is for the Committee to adjust its reinvestment policy--that is, its policy for handling repayments of principal on the securities--to gradually normalize the portfolio over time. Currently, repayments of principal from agency debt and MBS are not being reinvested, allowing the holdings of those securities to run off as the repayments are received. By contrast, the proceeds from maturing Treasury securities are being reinvested in new issues of Treasury securities with similar maturities. At some point, the Committee may want to shift its reinvestment of the proceeds from maturing Treasury securities to shorter-term issues, so as to gradually reduce the average maturity of our Treasury holdings toward pre-crisis levels, while leaving the aggregate value of those holdings unchanged. At this juncture, however, no decision to change reinvestment policy has been made."

  • "Underwriting standards - At most meetings, both small businesses and banks acknowledged that underwriting standards had tightened. Some small businesses reported that underwriting changes made access to credit more difficult, but not impossible, while others found the changes to be a significant hurdle to obtaining credit. Many banks acknowledged that lending standards had become more flexible prior to the economic downturn and that they since have returned to more traditional underwriting practices.... Greater focus on cash flow - Some banks acknowledged that prior to the economic crisis, credit scores or collateral values, often inflated [cva], were sometimes more important than cash flow in underwriting a small business loan. Banks and small businesses both concurred that strong cash flow is now one of the chief underwriting criteria. [cva]"

Read more...

Diversity is the key to economic and political evolution.
by Cat on Wed Jul 21st, 2010 at 08:43:43 PM EST
[ Parent ]
More Bernanke:
All of the loans extended through the multiborrower facilities that have come due have been repaid in full, with interest. In addition, the Board does not expect the Federal Reserve to incur a net loss on any of the secured loans provided during the crisis to help prevent the disorderly failure of systemically significant financial institutions.

I guess this does not include AIG and the money the NY Fed provided via AIG to Goldman etc. Nor the >>$1 trillion in QE. And how does he account for the interest paid by the Fed on "excess reserves" held by the TBTFs and other TARP recipients, courtesy of QE. What about Fanny and Freddie?

This is what Dylan Rattigan calls "The Big TARP Lie".

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jul 21st, 2010 at 09:12:05 PM EST
[ Parent ]

Display:
Login
. Make a new account
. Reset password
Occasional Series